Spotify, File-Sharing and Incomplete Statistics

Since Spotify finally launched in the US, the discussion has reignited about what the benefits of it are for musicians.

One recent conversation has involved people quoting diametrically opposite statistics about the influence of Spotify on file-sharing in Sweden. Some people quoting a stat that says file-sharing has dropped as Spotify has rolled out, and others saying that there’s more file sharing with Spotify…

The problem with both statistics is that there’s no binary relationship between Spotify and file-sharing, and none of the articles I’ve seen writing about it have made any attempt to differentiate between different media being torrented, or indeed whether what’s been measured is number of unique users, number of files or quantity of traffic. All of which can be interpreted in myriad ways.

I have also yet to see a breakdown of just whose music is being played on Spotify vs those artists whose torrent traffic has shifted, or the impact that either has had on music sales – digital or physical – which would also need to be put alongside all the other influences on those statistics too.

As an example, my own Spotify statements via CDBaby have thus far reported 4583 plays and paid me a grand total of $11.38, including precisely zero downloads via their own store – so in terms of raw financial return, 2 people torrenting my stuff and deciding to buy a CD or download, and/or go to a show would beat Spotify hands down.

But Spotify, we’re told, is all about discovery – people find you there and may then go and buy your stuff elsewhere. Be heard. That’s the mantra. But if it doesn’t pay, and the artist has no control over the biography that’s on their artist page there, or where the (one) sales link goes to (I’d happily swap all my royalties from Spotify for ever for the chance to have the ‘buy’ link go to Bandcamp instead of their ridiculous credit-based store), then wouldn’t it actually be BETTER for the artist to seed your material onto BitTorrent, to package it with a PDF that speaks directly to the people who’ve torrented it, to invite them to your own site to find out more?

The legality or otherwise of each activity is rather moot for independent artists who record their own songs (things get more complex when it’s a recording of someone else’s song), though the societal implications for activities that are against the law becoming normative are potentially far more problematic.

Spotify – like the Major labels who were granted a large share of the business in exchange for the rights to their catalogues (without – in the majority of cases – consulting their artists) – are horribly opaque with their accounting, and obfuscate any response to questioning about where the money their subscribers and advertisers pay is going. They talk in big numbers about how much is being paid out, but with no context. Thus leaving us without even the in-app statistics, let alone any way of mapping those to wider internet sales/traffic/download trends in a meaningful way.

This is the problem with statistics and the Internet – some things are very easy to map, particularly if the traffic is within a single domain, though it may still be impossible to extrapolate meaning from those raw numbers. But trying to track whether Spotify is causing people to buy – or torrent – music elsewhere is impossible to measure without doing extensive market research, which is hindered by the fact that most torrenting is against the law in most of the countries that have a vested interest in knowing this stuff. Again, to have any meaning, we’d also need to see data on the cost of the physical version, how it was packaged and what quality the torrented file was vs what was available to buy.

Which means? It’s disigenuous to pejoratively view someone torrenting a 24bit FLAC file as an alternative to buying something on iTunes without also addressing the lack of a legal file of the same quality elsewhere, as well as considering the influence that variable pricing and/or exclusively packaged beautifully design physical product may have had on their actions.

The other huge problem facing anyone trying to write authoritatively about this, as I implied earlier, is that the various lobbying agencies representing the major record labels, such as the BPI in the UK and the RIAA in the US, have thus far proved unwilling to provide any control group statistics about the broader financial situation in the traditional recording industry world. Particularly as it relates to what the majority of artists and musicians get paid. The artists themselves are often prevented from gaining access to the accounts relating to their own artistic work, so outside access is currently impossible.

What we end up with is vested interests at both ends of the spectrum using the bits of available statistics that best support their preconceived notions of good and bad, without any broader analysis of what those stats mean and why their incompleteness is significant.

So all statistical interpretation must be caveated with what’s missing and interpreted in the light of that. It’s not that incomplete stats aren’t useful. They’re just incomplete.

6 Comments

ok i can get critisicm of spotify for lack of artist control, the bios are great 80% of the time, and totally shit the other 20. a bio giving the impression an artists career ended 10 years ago can be actually harmfull to an artist so not just a minor point.
the suggestion that spotify encourages fle sharing – wtf? if it possible folks who do download all or most of their music from filesharing site are getting turned onto new music via spotify but lets make this clear that ain’t lost sales so not worth the stress of worrying about.

now we come to the big issue royalty rate.
4583 plays for 11.38
now if that was 4583 people hearing your music for the first time it would be a pretty good deal (hey advertising and they pay you)
equally if it was 1 person who listened to an album or 2 of yours every day for the year then given they have no physical product and will do same again next year 11.38 seems a pretty good deal. (what they do after hearing the track isn’t really relevant to the analysis)
no i dont think either possiblility is likely but both are possible from those stats.
also worth remembering folks on spotify do end up playing cds they already own. (its easier than switching music player) which in effect is money for nothing.
if on the other hand that 4583 plays is say 100 pople listening to your album 5 times each and then not not bothering to buy it cos its on spotify then that could be representing significant lost sales. (note if you dont subscrib you can only play tracks 5 times each anyway outside of the intro period anyway so anyone wanting a 5th listen is going to have to buy a cd) statistically i dont think that third option is any more likely that options 1 and 2. i could speculate but again thats not the point really the point is that the stats are pretty useless as they are.

personally i suspect financially it is in an artists interest to remain on spotify but possibliy not to keep complete back catalogues up there, nor nessesarily to put the latest album up straight away. release a ‘single’ (it doesnt need a physical copy) to get 3 or 4 tracks from a new album onto spotify (or a couple of new tracks and say an old track that reminds casual listeners they do know who you are) . then add the album when you know all sales to existing fan bases about dried up. (im guessing there is a fairly defined window after an albums release when direct sales start to dry up, or at least turn into a steady trickle outside of sales at gigs) , id also suggest it may be worth removing older stuff from spotify.
the problem is i may be thinking as a heavy music purchaser, a spotify addict and about profit maximisation as an economics graduate but its still if we are honest pure guess work. and im not expecting usufull acurate stats to ever really exist.
an album removed from spotify though please please please do wack up on bandcamp – youve got nothing to lose, it may create a half decent revenue stream and speaking as a music fan there is nothing more annoying than finding back catalogue no longer exists – with larger artists thats the kind of thing that drives people into file sharing.

I’ve been pushing Spotify hard. I love the service, think it is a great way to expose your music, and if people need to download your music to use it on other devices/etc, they can pursue alternative options. I’ve heard a lot of independent labels bash Spotify pretty hard for lack of significant financial return, but I feel it is short sighted.

I wish Spotify had greater flexibility. I wish, on the consumer level, it had some features it doesn’t. But its a service I feel will improve if the developers take feedback seriously.

“It’s disingenuous to pejoratively view someone torrenting a 24bit FLAC file as an alternative to buying something on iTunes without also addressing the lack of a legal file of the same quality elsewhere…”

That’s one of the reasons I love bandcamp – you can get HD audio files without paying a premium price. As for the store issues, it’s actually worse over here in the US: there is no way to purchase from an artist within Spotify.

Thurston
on November 20, 2011 at 8:51 am

Niche vs. Mass Marketing. They are two different things with two different business models.
I carry a double whammy because I’m an indie artist who plays jazz, which are both niches. There aren’t many passive listeners of jazz OR indie artists, because they don’t receive the massive airplay that delivers to passive listeners. Jazz/indie artists need ACTIVE listeners, the committed fans who consume way more music than the average person, and therefore have more discriminating tastes.
Active listeners are the crate diggers, the ones looking for obscure and scarce music, that is subjectively good in quality. This is analogous to a person shopping at Whole Foods or a Farmer’s Market, where they are willing to pay higher prices for higher quality products. Sure, it would be more cost effective for me to go to Walmart, but that would mean a sacrifice in quality.
I can’t say this applies to say Spotify vs. Bandcamp in the area of quality or genre, because music is a subjective thing. But I can say that active listeners are generally more focused on finding quality music OR music that majors won’t touch for fear of not making money with these artists. Why? They care more about music and invest more in it, especially in less populated niche genres/styles. There might not be as many active as passive listeners out there, but they are very valuable customers to niche artists in terms of financial support.
Many of these customers are more committed to supporting what they deem as “good” music, that many have access to illegal files and still choose to support the artist. However, if the culture of consuming music changes to streaming, and companies like Spotify indirectly lead people to believe that they are paying artists for the music, it makes it perfectly fine to consume all music on streaming services, and the artists walk away with pennies . . . . literally. “Oh, I’m not stealing it and I don’t have to buy it from itunes!” Wonderful world right?
I’ve heard artists who defend being on Spotify saying “well it just means I have to make music that people will want to listen to” as if that’s what’s going to put you in the ranks as an indie up there with Drake and Gaga. The reality is that these days, you likely need millions to sell millions, or to get a million plays. So the idea that if I just make “better” music, I’ll get my million (which still only gives you 2-3K, now you’re rolling in the dough!) is silly. If you give the active, buying listeners access to your music for free, they will listen for free. And no matter how you spell it out, for indie/niche/obscure artists, Spotify is basically giving your music away for free. That’s why ST Holdings numbers are down right now, because they have NO business on streaming sites.
I honestly think a better model IS invalidated illegal downloading, rather than validated streaming. Might sound weird. But I’d rather you steal from me than insult me by saying that my music is worth nothing.